The HUD Approved 100% DPA Deal

Oct 14, 2019 by

The HUD Approved 100% DPA Deal

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When Appraisals Come Back Low, Brokers Scramble to Salvage the Deal

Jun 29, 2019 by


As brokers, the primary job of bringing buyers and sellers together on a price usually seems like the bulk of the work, but it’s really only half the battle. Inspections, taxes, insurance and financing are just a few of the outside forces that need to be satisfied before closing.

The third party playing a critical role in the process is the appraiser. This is the uncompromising professional who operates and is bound by independent standards and rules.

So, what happens when the appraisal comes back lower than the negotiated price?

Unfortunately, nothing will happen automatically unless this scenario is previously spelled out in the contract. It’s up to brokers to get back to work and recalibrate new terms for the transaction.

“It depends on the buyer,” says Chris Bradford, broker of Lifestyl Real Estate in Indiana. “They may be cash-strapped, [but] if they have enough for 20 percent down, they might have enough if it doesn’t appraise.”

A short appraisal changes the leverage landscape of the deal. Even if they have the cash on hand, buyers won’t be as inclined to honor their offers once they know the underlying asset has a smaller basis price. Sellers could have to come down halfway between the agreed-upon price and the appraised value—or even lower, depending how badly they want to sell the property.

Bradford notes that sellers might not be able to come down much because they might need to make a certain amount of money in order to fund their next purchase. In that event, it’s incredibly hard to keep the buyer at the same price, but it’s also difficult to start over, knowing that any other buyer would likely have the same appraisal issue.

Other than renegotiating, brokers have limited options:

Appeal the appraisal. Most mortgage companies allow for such a challenge, but the chances of getting a higher valuation are slim. Assuming the appraiser didn’t make a mistake and has legitimate comps to support the appraisal, lenders will typically stand by their vendors. If the appraiser was from an area outside of where the home was located, there’s a better chance he or she missed something noteworthy, such as the proper school district; the fact that someone is willing to borrow more to attain the property doesn’t change the valuation formula.

Seek out another lender. A different bank would use a different appraiser, and that person could see things differently. You could even stage the property better, provide suggested comps that support a higher valuation, and call out improvements that might have been missed during the first appraisal. Shy of directly telling the appraiser what to do, this guidance may help your cause if the appraiser is open to hearing your suggestions. The risk is that the buyer would have to pay for this work whether or not the second appraisal comes up—and it usually doesn’t, Bradford says.

Find another buyer. Starting over is challenging, but much of the groundwork would still be in place from the previous listing and marketing process. A good place to start is with people who were already interested in the home or had lost out in a bidding war. If Offer A was $ 50,000 short of the winning bid, and Offer B is more than $ 100,000 higher than the appraisal, then Offer A would be better than compromising 50/50 on a reduced price. Of course, that assumes the new buyer can cover a short appraisal.

Walk away. As tough as it is to lose a deal, especially one that gets very close, there might be no choice but to walk away. If your seller does decide to terminate the contract and pull the listing, it’s a good idea to pay attention to comps in that area for the next six months in case there’s a verifiable upswing that would justify the price your seller needs.

Since many agents are inexperienced with appraisal shortfalls, Bradford says that it’s critical for brokers to educate their team on how to handle such situations. Equally important, he says, is to educate clients about this possibility—especially in low-inventory markets, where short appraisals are more likely—so that it’s not such a shock once it happens.

Of course, the best way to defend against these appraisal threats is to ensure that they never occur in the first place. Andrew Hillman, broker of Hillman Real Estate in Massachusetts and New Hampshire, says that “the strategy should start well before the appraisal is complete.”

Hillman recommends a proactive approach to prepping the appraiser and securing a higher down payment from the buyer.

“It’s the broker’s responsibility to provide the appraiser with details that aren’t stated on the listing sheet,” Hillman says. “For example, if the broker received multiple offers, this is information that the appraiser needs to know. This would show that the market determined the value with the demand exceeding supply. This holds weight.”

While a short appraisal presents a variety of problems for a deal, Sep Niakan, broker of HB Roswell Realty in Miami, Fla., notes that it can also create an opportunity for savvy buyers if sellers won’t come down to market price.

“The idea is to lock the deal in for the buyer as a first step, especially if there might be other buyers interested in the property. If the agent is confident that there are no comps to get the home appraised at the agreed-to-purchase price, they can wait until the appraisal comes in low and use that as a bargaining tool to get the price lower,” Niakan says. “The buyer is happy, and the seller is much more likely to compromise at that point since they probably already passed the inspection period and have also lost a few weeks of time before the appraisal report has come in. They’re just a week or two from closing and are more likely to be willing to compromise. It doesn’t always work, but it’s a legitimate tactic.”

Andrew King is a contributing editor to RISMedia.

The post When Appraisals Come Back Low, Brokers Scramble to Salvage the Deal appeared first on RISMedia.


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The Real Deal

Jan 26, 2018 by

Pam O’Connor Builds a Network, Influences an Industry, and Impacts Lives

Editor’s note: A PDF file version of this article is available here. A digital magazine version of this article is available here.

Pam_OConnor_Tribute_CoverEveryone knows real estate is a “relationship business,” but unfortunately, the phrase is overused and often unsubstantiated. Talk to people who have known Pam O’Connor over the course of her 30-plus years in the real estate and relocation business, however, and they will tell you that she brings the meaning of relationship to a whole new level. When it comes to caring, O’Connor is the real deal.

“They say that what makes a leader special is their ability to show that they really care,” says John Reinhardt, president and CEO of Brooklyn, N.Y.’s Fillmore Real Estate. “I have to tell you, Pam really cares. There were times in my life when I knew I needed a Pam fix—some straightforward guidance, support and direction. It was likes Mom’s chicken soup…you always seemed to feel better.”

As she prepares to retire from her post as president and CEO of Chicago-based Leading Real Estate Companies of the World® (LeadingRE) on March 31, O’Connor’s professional and personal commitment to the network’s more than 550 global member firms, along with her colleagues at LeadingRE, will be sorely missed and never forgotten. But for O’Connor, it’s all part of her master plan.

“I’ve worked for some time to put the right people in place,” O’Connor explains. “They’re clicking on all cylinders, the company is operating very successfully, and it’s time to pass the baton. LeadingRE has been very, very good to me. I wanted to leave it in a good place, and I believe I’m doing just that.”

That baton will be passed to current COO and Luxury Portfolio International® President Paul Boomsma, the successor to the president and CEO role, who has worked closely with O’Connor since 2005 when he came on board for the launch of Luxury Portfolio International®.

“After working for Pam for 13 years, I do feel that I’m now suited to carry on the path that she began,” says Boomsma. “It’s not an easy job; however, she’s worked hard to put a great team in place and started planning for succession a number of years ago. As she said, ‘It is part of the job to prepare for the future.’ We are very excited to celebrate her career and the role she played in making LeadingRE what it has become today.”

And over the years, Boomsma has been afforded a birds-eye view of O’Connor’s expertise as a leader and mentor. “Pam is the master of maintaining relationships and is a wealth of knowledge on all matters of the industry,” he explains. “She is a consummate diplomat, a fantastic communicator and writer, and always goes out of her way to help our members succeed. She has a heart that extends from business to the lives and families of our members, and I think her ‘Culture of Caring and Giving’ is consistent throughout our staff and in the actions of our members, as well.”

Her tenure at LeadingRE represented a pinnacle in O’Connor’s career, where she was able to apply the experience she gained while working at the All Points and RELO® networks. As O’Connor explains, “Given the internet’s capacity to help people find any good brokerage anywhere, and the popularity of local brands with today’s consumer, it was a perfect time to develop and diversify this hybrid network to offer franchise-like global connections and business resources for firms that want to build their own brands.”

“LeadingRE came into existence, grew and evolved into what it is today all under her guidance,” says Boomsma. “She was the architect of the growth and along the way raised the flag high for the independent broker. During a time of many mergers and acquisitions, LeadingRE brokers flourished to be stronger than ever. She brought the importance of being a strong local broker with broad global reach into reality. Pam pushed LeadingRE to have more global opportunities than any other organization.”

“Pam has not only been a leader in our industry, she has been a visionary,” says Helen Hanna Casey, CEO of Howard Hanna Real Estate Services. “When others believed that relocation networks might be pushed out of the industry, Pam believed that she and her team could build a better system that could be the premiere network in the world. She engaged and excited all of us to the possibilities. She is a mentor and inspiration, but most of all, I am proud to call her a friend.”

Bringing Leading Real Estate Companies of the World® from vision to reality was not without challenges, of course, and O’Connor leaned into her industry acumen and relationship-building expertise throughout the journey. Assembling a star-studded roster of brokerages after what O’Connor refers to as NRT’s “shopping spree” of independent firms 20 years ago, is understandably an accomplishment she holds near and dear to her heart.

At RISMedia's 2017 CEO Exchange (from left to right): Allen Tate Companies' Pat Riley; Pam O'Connor; John L. Scott's Jennifer Lind; and Fillmore Real Estate's John Reinhardt

At RISMedia’s 2017 CEO Exchange (from left to right): Allen Tate Companies’ Pat Riley; Pam O’Connor; John L. Scott’s Jennifer Lind; and Fillmore Real Estate’s John Reinhardt

“From the earliest days of the formation of this network, Pam has been blessed with the ability to navigate and bring consensus and the best out of each of her followers,” says Pat Riley, president and CEO of North Carolina-based Allen Tate Companies. “Bringing together in mind and spirit all of these strong, very independent principals and thinkers is an art form for which she is a master. Each new board chair through the years…coupled with the legacy seat holders…presented an opportunity for Pam, not a challenge. She is the ultimate bridge-builder, consensus-maker, and public relations wizard.”

And it’s not just the network of brokerages she’s created that O’Connor looks to with great pride; she also considers one her greatest accomplishments “being fortunate enough to hire the best people”—the internal team that keeps the LeadingRE engine running in order to create “a culture based on relationships and standards of performance that I believe is unique in the business.”

Those relationships that O’Connor and her team worked so hard to build are what she will miss the most. “We have such amazing members in this network, many of whom are close personal friends as well as colleagues,” she says. “They are not only special because of what they are—smart, talented, innovative operators—but also because of who they are—gutsy, tenacious, caring, trustworthy, and authentic. They’ve made my job so much fun for more than 30 years.”

O’Connor will be equally missed by the many members of LeadingRE. “Pam’s impact is immeasurable. She has such strong relationships with broker/owners and the relocation industry,” says LeadingRE Chairman of the Board Joe Horning, president of Wisconsin-based Shorewest REALTORS®. “She brings everyone together for the betterment of the network.”

LeadingRE’s members readily attest to O’Connor’s unparalleled level of hands-on care. “Rest assured, if Pam didn’t have the answer, she absolutely knew the right people to go to, and when you told them that Pam sent you, her clout opened doors for you,” says Reinhardt. “Her generosity with others has made her one of the most cherished leaders in the industry.”

And this level of commitment at the member level translated to the success of LeadingRE as an organization. “She has helped us achieve incredible growth, in part by providing a full range of tools and services to support the success of our members—online learning through Institute, high-end marketing through Luxury Portfolio International®, leadership development through the MAESTRO program, and so much more,” says Horning. “Our global expansion is another key part of Pam’s legacy. When we adopted the name Leading Real Estate Companies of the World®, we took it seriously, and our membership now extends to 65 countries.”

Pacific Northwest-based John L. Scott Chairman and CEO Lennox Scott agrees. “Pam O’Connor led Leading Real Estate Companies of the World® from just being a national broker-to-broker referral network to that of providing world-class services for major independent real estate companies, from training broker associates, office leaders and CEOs to setting up an international luxury home marketing and corporate services program. I am grateful for Pam’s leadership, inspiration and friendship.”

Fortunately, O’Connor’s retirement will not keep her completely on the sidelines, as she intends to remain active through consulting and participating on select industry boards. And her passion for the broker’s cause is not something that will diminish anytime soon. Her best advice for brokers? Believe in yourself. “You operate in one of the most difficult business environments—without the power of the paycheck. You have survived and even thrived in back-breaking, 50 percent-loss-of-revenue recessions. Year in and year out, you face those who are determined to take over your business, only to discover how difficult it is to do what you do. So don’t let the interlopers distract you. Keep creating culture, adding value, innovating, and taking care of your people, and you’ll be just fine.”

O'Connor joins a panel discussion at RISMedia's 2017 CEO Exchange

O’Connor joins a panel discussion at RISMedia’s 2017 CEO Exchange

Parting Gifts

As she prepares for the next phase of industry involvement and life post-retirement, O’Connor shares some business insights and personal wisdom.

Maria Patterson: What are some of the biggest lessons you’ve learned over the course of your career?

Pam O’Connor: If it looks too good to be true, it probably is, and there aren’t many true shortcuts. In most cases, you just have to do the work.

MP: Who are some of your greatest role models?

PO: My mother, widowed at 37, who taught me never to be a victim. So many who taught me the business…Allen Tate, Rob Sibcy, Wes Foster, Michael Saunders, Ron Peltier, and so many others. My girlfriends, who inspire me to be a better person every day.

MP: What are some of the biggest changes you’ve witnessed in the real estate industry over the years—both good and bad? 

PO: The internet, which generated virtually all changes to the business in the last 30 years—all for the good, in my opinion. On the flip side, the disproportionate focus on money—discounting, buying agents, etc.—rather than value and culture, that we’re seeing from most of the new entrants in the business today.

MP: What was one of the biggest challenges you faced at LeadingRE, and how did you handle it?

PO: Getting our members to weave LeadingRE into their brands as a qualifier, and we’ve made good progress in that area, due in part to re-branding with a new, easier-to-use logo, and also, getting agent buy-in with their increased direct participation through our agent SUMMIT conferences, back-office support tools and other communication.

MP: What are you most looking forward to in retirement?

PO: Definitely staying busy with work and play—just a different kind of work. Writing a book, doing some projects that interest me, serving on a board or two, doing some volunteer work, and traveling to places my job hasn’t yet taken me, including a Danube River cruise in the spring from Budapest to Prague. I don’t plan to be sitting at home eating bon bons!

For more information, please visit

Maria Patterson is RISMedia’s executive editor. Email her your real estate news ideas at For the latest real estate news and trends, bookmark

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Can Equifax Hack Your Deal?

Sep 11, 2017 by

Can the Equifax hack, hack your deal?

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